Asked by Aubin Guédon on May 07, 2024
Verified
An increase in forecast accuracy increases both the overstocked and understocked quantity and decreases a firm's profits.
Forecast Accuracy
The degree to which forecasted values match or are close to the actual realized values.
Overstocked Quantity
Refers to having more inventory on hand than is necessary, leading to potential excess storage costs and reduced cash flow.
Understocked Quantity
The situation where the quantity of inventory available is less than the demand, leading to missed sales or delays.
- Comprehend the contribution of rapid responses and greater accuracy in forecasting to the effectiveness of supply chain management.
Verified Answer
MB
Michael BertrandMay 09, 2024
Final Answer :
False
Explanation :
An increase in forecast accuracy decreases both the overstocked and understocked quantity and can increase a firm's profits by better aligning inventory levels with demand.
Learning Objectives
- Comprehend the contribution of rapid responses and greater accuracy in forecasting to the effectiveness of supply chain management.